What caused the $105-bn ‘fat-finger’ mistake?  

It’s hard not to feel sorry for whoever the person is, given how devastating it must be to see just how much damage he or she has caused. Samsung is doing all it can to prevent his or her identity from slipping through the highly wired cracks of South Korea, but eventually there could be a leak. 
The employee was trying to pay workers 1,000 won (Bt30) per share in dividends, but instead somehow gave them 1,000 Samsung Securities shares – on paper worth 112.6 trillion won (more  than Bt3 trillion). There is no doubt who’s at fault here. In the world of finance, every single decision has to do with money –more often than not, other people’s money. 
However, in such cases it’s all too easy to blame one person and overlook the real culprit: a poorly designed system where monitoring and controls are deliberately omitted. 
The Samsung case is being called the world’s biggest “fat-finger” mistake, when in reality it reveals how much local financial companies are bending the rules and just how riddled with loopholes the system is.
One industry watcher close to the matter said that the problem was just waiting to happen, given how brokerages operate.
“It’s not because they were okay with the loopholes. It’s just that they are used to doing things this way, and also because nobody really expected the system to fail as hard as it did,” she said. 
“Everyone’s ready for the big failures and mistakes, but nobody thought an employee could make a mistake on her order key.” 
Samsung Securities is one of South Korea’s five largest brokerages. As an affiliate of Samsung, it has its share of both advantages and disadvantages. As a member of the “Samsung Family”, when other brokerage stock prices ran downhill, it stood steadfast.
One big reason is that it had powerful supporters on its side, such as South Korea’s National Pension Service (NPS) – the world’s third-largest state pension fund.
But this situation may change quickly, after the brokerage revealed that total NPS funds had plummeted more than 40 billion won in value. The NPS has now decided to fire Samsung Securities from its asset management, and the local pension fund is not the only one. More companies have stood up to say “no” to Samsung Securities, and this will take a huge toll on the brokerage’s margins.
The price of having no internal control systems, and not being stringent enough on employees’ performance and standards, is now wreaking havoc on one of the biggest brokerage houses in South Korea.
In an undisclosed interview with an employee who attempted to sell his error-given phantom stocks, he said he didn’t expect to get caught because he thought the issue was limited to his account. If he kept quiet about it, he thought nobody would know. 
He said he realised just how terribly wrong he was the minute he saw stock prices starting to fall. Many others – likely operating under the same illusion – were also offloading their unexpected windfall. 
These folks shouldn’t be let off the hook, and will indeed have to accept whatever legal fates are dealt to them. But this incident should not merely lead to ruin for a group of hapless employee-investors. It should be a lesson that to err is human – which is why we need systems in place that catch those errors before disaster ensues. 

Kim Ji-hyun is managing editor of The Investor magazine.